Tussle for top spot but Q3 sees the overall India smartphone market jump

Lenovo takes Micromax's spot, coming in second place in the Indian market which clocked 32.3 million units in the quarter ended SeptemberNovember 15, 2016, 15:45 IST

Image source: ThinkstockLenovo-Motorola became the new No 2 smartphone player, pipping Micromax, and Xiaomi made its debut among the top five in the Indian market which clocked 32.3 million units in the quarter ended September, a first for the industry.

India's smartphone market grew 17.5% on-quarter and 11% on-year in the July-September period, however, given the dismal first half of the year, analysts at IDC expect annual growth to be in the higher single digits in 2016.

"The seasonal spike in third quarter of the year can be attributed to the channel preparation for the festive season, mega online sales and early import of smartphones owing to Chinese holidays in October,” says Karthik J, senior market analyst, client devices, IDC India.

Chinese vendors not only increased pressure on incumbents but also increased their online shipments, leading to an on-quarter 35% swell in the online segment, which now comprises over 31% of the market. Lenovo and Xiaomi, in that order, lead the online segment as of September.

Meanwhile, commercial rollout of Reliance Jio revved up 4G smartphone shipments by 25% on-quarter. In the three months ended September, seven of 10 smartphone shipped were 4G enabled and 90% of the phones sold by e-commerce players were 4G, data from IDC India said.

Samsung is No 1 in smartphone segment with 23% share, up by 8% on-quarter and 9.7% on-year, despite its troubles due to the Galaxy Note 7 which was to be launched in September. Multiple new launches across both offline and online channels added onto the its strong portfolio, while J2 in the affordable segment also propelled share.

Lenovo-Motorola has 9.6% share of smartphone market, due to 46% sequential growth due to Motorola's E3 Power and Moto G4 devices. Shipments of these models doubled on-quarter and that of Lenovo's K5 series were up by 40%, analysts at the firm said.

"Micromax slips to third position with a 32% decline in smartphone shipments over previous quarter," analysts said, a worrying trend as the country’s top home grown vendor faces tremendous pressure from local competition in sub Rs 6,800 segment and from Chinese players in the sub Rs 10,000 segment.

The top example of this pressure comes from Xiaomi that clocked a 7.4% share, just shy of Micromax's 7.5% share for the quarter.

"As Xiaomi plans to expand its footprint in the offline channel, competition is likely to get intense in Indian smartphone market," analysts at IDC said.

Continuous investment from Chinese vendors on retail expansion and high decibel marketing has disrupted plans of home-grown vendors to some extentBut to remain relevant, home-grown vendors are counting on the feature phone market even though they are facing certain supply issues for a few components, analysts at the firm added.

With the commercial launch of Reliance Jio service with attractive introductory offer, the Lyf branded smartphones saw a sharp demand with reports of stock outs at some locations. Lyf, with 7% share, is also adding to the intense competition.

In overall phone market, Samsung continued to lead, followed by Lava, Intex, Micromax and Karbonn in that order. About 72.3 million units were shipped in the third quarter, up 18.1% on-quarter.

Feature phone shipments rose 18.6% on-quarter to 39.9 million units, but feature phones market declined 12.4% over the same period last year, pulling down overall mobile phone shipments by 3.3%.